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As a result of alteration allegation trailing the new tax laws, it will not be tidy for the federal government to go ahead with the implementation slated for January 1, 2026. Some concerned Nigerians have alleged of a different version of the tax laws from the one passed by the National Assembly. They have also enjoined the federal government to postpone the implementation of the tax laws until the matter is fully investigated and resolved.
President Bola Tinubu had on June 26, 2025 signed the Tax Reform Bill into Law. These include: the Nigeria Tax Act, which consolidates existing tax laws in the country, the Nigeria Tax Administration Act that establishes a consistent framework for the Nigeria Revenue Service (Establishment) Act. This replaces the Federal Inland Revenue Service Act with a new revenue agency to be known as the Nigeria Revenue Service, and the Joint Revenue Board (Establishment) Act. It creates a structure for cooperation among different levels of government revenue authorities.
These reforms, according to the government, are designed to simplify the tax system, increase revenue, improve the business environment, and offer relief to low-income individuals, small businesses, among other benefits. Notwithstanding, it appears that the controversy trailing the implementation may not go away anytime soon, as lawyers have argued that re-gazetting the Acts as the government has done, is illegal. According to Section 58 of the 1999 Constitution (as amended), any post-passage alterations without legislative approval has no legal force, and therefore, amounts to forgery.
Already, the federal government has been dragged to a Federal High Court in Abuja by a civic organisation, Incorporated Trustees of African Initiative, praying the court to stop the implementation of the tax laws pending the hearing and determination of the suit. Also, the Nigerian Labour Congress (NLC) and the National Association of Nigerian Students (NANS) have threatened a nationwide protest over the matter if the implementation is not suspended.
The House of Representatives caucus also called for the immediate suspension of the implementation. The alarm over the alleged alterations to key provisions of the bill passed by a Joint session of the National Assembly was first raised by a member of the House of Representatives, Abdussamad Dasuki from Sokoto State. He observed during plenary about three weeks ago that the tax reform bills passed by the legislature were different materially from the versions gazetted and released to the public.
Though the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has clarified some of the misgivings about the new tax law, saying the numerous benefits include little or no taxes for the low-income earners, while 97 per cent of small businesses will henceforth be exempted from Corporate Income tax, Value Added Tax(VAT) and withholding tax, while large businesses may see a drop in the taxes they currently pay.
However, these benefits could not allay the fears of most Nigerians and business owners over the new tax laws. Ordinarily, matters of tax reforms are consequential, especially if the goal is to promote economic growth and financial inclusivity. For many Nigerians and investing public, government policies are often good or paper but bad in implementation. Taxes have profound implications for individuals and businesses. With tempers flaring, it is advisable that the alleged alterations and other grey areas in the tax laws be addressed before implementation. Issues relating to equity, fiscal federalism, and socioeconomic balance should be the hallmarks of a good tax regime, which Nigerians need.
In fact, taxation has for decades been a controversial matter in the country. That makes any reform aimed at correcting such structural imbalance, particularly, the over-reliance on oil revenue, a step in the right direction. When the Executive sent the Tax bills to the legislature late in 2024, one of the main targets of the tax reforms was to achieve a minimum of 18 per cent tax-to-GDP ratio within the next three years.
Currently, Nigeria’s tax-to-GDP ratio is between 6.7 and 10.8 per cent. This is one of the lowest in the world. Even in Africa, Nigeria’s tax-to-GDP ratio is below that of South Africa and Ghana which have tax-to-GDP ratio of 27 per cent, and 13 per cent, respectively. The African average is 16.5 per cent. The International Monetary Fund (IMF) recommends at least a 15 per cent tax-to-GDP ratio for sustainable economic growth. Nigeria should have a reasonable percentage of tax-to-GDP ratio to ramp up economic recovery. That will also help widen the nation’s tax base and improve revenue generation, as well as ensure that the rich pay the right amount of taxes rather than embark on tax evasion and avoidance.
We urge the federal government to handle the tax matter with utmost caution. The concerns of some Nigerians over having different versions of the tax law are legitimate and must be fully addressed before the implementation commences. For instance, airline operators are worried that if the new tax laws are implemented, the aviation industry could collapse because domestic airfares will rise beyond the reach of many.
Tax laws that have moved other countries forward are structured in a manner that is investor and business friendly. Besides, public trust and transparency are necessary to ensure inclusivity in tax implementation process. We urge the government to postpone the implementation of the tax laws until the alleged alterations and other matters are amicably resolved.
